Custom, Excise & Service Tax Tribunal
Commissioner Of Customs vs Bhansalai Chemicals (Madras) Ltd on 18 December, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.C/500/2002
[Arising out of Order-in-Appeal C.Cus.No.384/2002 dt. 28.8.2002 passed by the Commissioner of Customs (Appeals), Chennai]
For approval and signature :
Honble Shri P.K. Das, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ? :
3. Whether the Members wish to see the fair copy of
the order? :
4. Whether Order is to be circulated to the Departmental authorities ? :
Commissioner of Customs,
Chennai
Appellant
Versus
Bhansalai Chemicals (Madras) Ltd.
Respondent
Appearance:
Shri Parmod Kumar, JC (AR) For the Appellant Shri N.Viswanathan, Advocate For the Respondent CORAM :
Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of hearing : 27-08-2013 Date of pronouncement : 18-12-2013 FINAL ORDER No.___________ Per Mathew John
1. The respondent imported Potassium Permanganate BP 93 from China and filed 3 Bills of Entry, namely, 08257 dt. 28.4.2000, 08942 dt. 9.5.2000 and 10047 dt. 23.5.2000 for clearing the goods from the warehouse. At the time of clearing the goods for home consumption, they had claimed exemption from basic customs duty under Customs Notification No.31/97-Cus by producing Duty Exemption Entitlement Certificate as required under the notification. CVD was charged at 16%. Further, on Potassium Permanganate imported from China anti-dumping duty was leviable under Notification 16/99-Cus dt.9.2.99. As per this notification, anti-dumping duty to be paid was equal to the difference between Rs.61,153/- and the landed value of the goods per MT. The dispute involved in this appeal is about the manner in which the "landed value" is to be calculated. To state briefly, the department contends that for arriving at the landed value, the Basic Customs Duty (35%) for which exemption under notification no.31/97-Cus was claimed and surcharge of 10% of the Basic Customs Duty charged (which worked out to zero in this case) as per section 118 of Finance Act 1999 should not form part of the landed value whereas the respondent contends that for arriving at the landed value, the basic customs duty that is applicable as per the tariff (without taking to consideration the exemption under notification 31/97-Cus) is to be taken into account. Since the core of the dispute is about levy of anti dumping duty under notification 16/99-Cus dt. 9.2.99, the complete text of the notification is reproduced below :-
WHEREAS in the matter of import of Potassium Permanganate falling under Chapter 28 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), originating in or exported from the Peoples Republic of China, the Designated Authority vide its final findings, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 8th August, 1995 had come to the conclusion that -
(a)?Exporters from the Peoples Republic of China have sold Potassium Permanganate in India, below normal value;
(b)?the Indian industry has suffered material injury;
(c)?the imports caused material injury to the Indian Industry.
AND WHEREAS on the basis of the aforesaid findings of the Designated Authority, the Central Government has imposed anti-dumping duty vide notification No. 137/95-Customs, dated the 5th September, 1995 [G.S.R. 616(E), dated 5th September, 1995], published in Part II, Section 3, Sub-section (i) of the Gazette of India Extraordinary, dated the 5th September, 1995;
AND WHEREAS the Designated Authority vide its final findings in review, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 18th December, 1998 has concluded that -
(a)?Potassium Permanganate originating in, or exported from, the Peoples Republic of China, had been exported to India below normal value;
(b)?Domestic industry would suffer material injury in case the anti-dumping duty in force is removed;
(c)?the injury to the domestic industry would be caused from imports from Peoples Republic of China in case the anti-dumping duty in force is removed.
Now, therefore, in exercise of the powers conferred by sub-sections (1) and (6) of section 9A of the said Customs Tariff Act, read with rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government after considering the aforesaid findings of the Designated Authority, hereby imposes on Potassium Permanganate, falling under Chapter 28 of the First Schedule to the said Customs Tariff Act, originating in, or exported from, the Peoples Republic of China and imported into India, an anti-dumping duty at a rate which is equivalent to the difference between Rs. 61,153 (Rupees sixty one thousand one hundred and fifty three only) and the landed value of imports of Potassium Permanganate per metric tonne.
2.?The anti-dumping duty imposed under this notification shall be effective upto and inclusive of the 4th of September, 2000, unless the time limit is extended or the notification is revoked before such time, by notification in the official gazette.
Explanation. - For the purposes of this notification, landed value means the assessable value as determined under the Customs Act, 1962 (52 of 1962) and includes all duties of customs except duties levied under sections 3, 3A, 8B, 9 or section 9A, as the case may be, of the said Customs Tariff Act.
2. The adjudicating authority decided that landed value was to be calculated without including the basic customs duty for which exemption was claimed under notification 37/99-Cus. And the Surcharge of 10% of Basic Duty. On appeal filed by the respondent, the Commissioner (Appeals) held that for calculating landed value, the Basic Customs Duty (35%) as per tariff and Surcharge (10% of BCD) were to be taken into account. For arriving at this conclusion, the learned Commissioner (Appeals) made a distinction between Basic Customs Duty that is levied under the Customs Act and the Basic Customs Duty actually collected. The Commissioner (Appeals) was of the view that as per the Explanation appended to the above notification customs duty levied as per the tariff is to be taken into account. Accordingly, the order of the lower authority was set aside by the Commissioner (Appeals) and the appeal filed by the respondent was allowed. Aggrieved by the order of Commissioner (Appeals), Revenue has filed this appeal.
3. The contention of Revenue is that the expression "levied" used in the Explanation to notification 16/99-Cus has to be understood as customs duty that is levied under the Tariff as reduced by any exemption notification and not the tariff rate as claimed by the respondent. The delegated legislative function cannot be seen as distinct from levy imposed by the Parliament for the purpose of arriving at landed value. The Ld. AR for Revenue points out that this issue is already decided by Tribunal in the following cases:
(i) CC Vs Rajendra Chemicals Corporation - 2005 (188) ELT 505 (Tri.-Chennai)
(ii) K.C. Cement Industries Ltd. Vs CC Kandla - 2010 (249) ELT 153 (Tri.-Ahmd.).
Therefore, Ld. AR submits that the appeal filed by Revenue may be allowed since the matter is already decided by the Tribunal.
4. Opposing the prayer, Ld. Advocate for the respondent submits that decisions relied upon by Ld. AR for Revenue have not examined the meaning of the word "levied" used in the notification as compared to "assessed" and "collected" which are different from "levied". He argues that the Commissioner (Appeals) has examined this aspect with reference to the decision of the Hon. Apex Court in the case of M/s. National Tobacco Co. of India Ltd. - 1978 (2) ELT (J 146) (SC) and also decision of the Special Bench of the Tribunal in the case of Collector of Customs, Bombay Vs Parkh Dye-Chem Industries (P) Ltd. - 1986 (24) ELT 119 (Tri.).
5. His argument is that when an order is passed sub silentio on a very important aspect of the dispute, such order cannot have any precedent or binding effect. In support of this argument he has cited few cases like Hindustan Motors Ltd. Vs CCE - 1993 (63) ELT 723 (Tribunal) and Dhanlakshmi Texturisers Vs UOI - 2005 (179) ELT 23 (Guj.).
6. He further points out that levy of duty is a legislative action and therefore the word "levied" used in the Explanation can refer only to the levy as per the tariff which is passed by the Parliament.
7. He also relies on CBEC Circular No.25/2002-Cus dt. 9.5.2002 issued in the matter of anti-dumping duty on mild steel plates imported from Russia, Kazakhstan and Ukraine under Notification 100/98-Cus. Para 3 of Circular 25/2002-Cus dated 09-05-2002 reads as under:-
3.?The DGAD have since clarified that the concessional duty under various exemption notifications had not been considered while calculating the anti-dumping duty in the context of anti-dumping investigations on mild steel plates imported from Russia, Kazakhstan and Ukraine. In the light of this clarification, I am directed to convey that the provisional assessments may kindly be finalised, keeping in view the facts and merits of individual cases. Difficulties, if any, faced in the implementation of above instructions may be brought to the notice of the Board.
8. He submits that it is very clear that the Director General of Antidumping (DGAD) which is the designated authority for deciding anti-dumping duty takes into account only the normal customs duty payable under the customs tariff and not customs duty payable after giving effect to any exemption notification.
9. Ld. advocate further argued that anti-dumping duty has to be with reference to the supplier abroad and the price at which the supplier supplies goods to India and not with reference to an importer or exemption notification that the importer may claim especially a notification like 16/99-Cus which is attached with export obligation. He argues that if the argument of Revenue is accepted, it will result in a situation where a person importing the said goods during the relevant period at the same CIF price at which the respondent imported did not have to pay duty anti-dumping duty. But the appellant who imported the goods with an export obligation, as enforced by DGFT, had to pay anti dumping duty. Further he points out that anti dumping as proposed by Revenue duty works to almost equal to the exemption made available under the DEEC scrip, thus negating the very purpose of DEEC exemption and leading to ridiculous outcome.
10. He also submitted that respondent could claim exemption from anti-dumping duty by virtue of Customs Notification 51/2000-Cus dt. 27.4.2000 issued prior to first import made by respondent in this regard. The respondent could not claim such exemption at the time of assessment but in view of the decision of the Tribunal in the case of Sonic Band International Vs CCE Vadodara - 1988 (109) ELT 524 (Tribunal) the said exemption could be extended to respondent even at this stage.
11. Ld. advocate further submits that adjudicating authority has gone ahead with the decision without actually ascertaining from the designated authority what exactly was the rate of customs duty that was taken into account for deciding the cut off landed value of Rs. Rs.61,153/- below which anti-dumping duty is to be paid. Therefore, he submits that appeal filed by Revenue may be rejected.
12. We have considered submissions on both sides. The argument of the learned advocate for respondent is that the words "duty levied" refers only to duty as prescribed under the Tariff by Parliament without giving effect to the notification. There is nothing in the decision of the Hon Apex Court in the case of National Tobacco Co. Of India Ltd, relied upon by the Commissioner (Appeal), to this effect. In fact in that case the Court interpreted that levy may include both imposition of a tax as well as assessment. Section 28 of the Customs Act envisages issue of demand by proper officer for duty not levied or short levied. Surely a customs Officer cannot make demand duty over and above what is levied by the Parliament. However the Tribunal in the case of Parekh Dye-Chem. Industries (P) Ltd. 1986 (24) ELT 119 (T) held a view similar to what the Commissioner (Appeal) held in this case. However, this position does not seem to hold any longer. The word leviable is used in the context of countervailing duty imposed under section 3 (1) of the Customs Tariff Act, 1975 which is reproduced below :-
SECTION 3.?Levy of additional duty equal to excise duty, sales tax, local taxes and other charges. (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article :
13. The present position is that for the purpose of levying such additional duty of customs under section 3 (1) of Customs Tariff Act, it is not the excise duty as per the Central Excise Tariff which is being taken into account. Where there are exemptions from excise duty granted unconditionally, the rates resulting after giving effect to such exemption is considered as excise duty for the time being leviable on like articles. In fact, there are many cases, where even in the case of conditional exemptions, the court have held that rates as applicable after giving effect to such notifications has to be considered as duty leviable on like goods in India. The following decisions are given as instances where such decisions were taken:-
(i) UOI Vs. Rakesh Enterprises-1991(56) ELT 39 (Bom)
(ii) Lohia Sheet Products Vs. CC -2008 (224) ELT 249 (SC)
(iii) CCVs. Malwa Industries-2009 (235) ELt 214 (SC)
14. It is to be noted that it was in the context of levy of countervailing duty that the meaning word "levy" was interpreted by the Special Bench in Parekh Dye-Chem Industries (supra) in the year 1986, which position now stands overruled both by practice as well as by decisions of the Apex Court as mentioned above. Therefore, we are of the view that the word "levied" used in notification 16/99-Cus cannot be interpreted to mean duty as specified in the Tariff. Currently no distinction is being made between duty levied by parliament and effective rates notified by the executive in exercise of delegated power of legislation. This position is consistent with the position being canvassed by Revenue and as decided by Tribunal in the cases relied upon by Revenue. For this reason the order of the Commissioner(Appeal) needs to be set side.
15. On the other hand this interpretation seems to produce ridiculous outcome, in the facts of this case, as canvassed by the respondent and recorded in para 9 above. In the matter of levy of anti-dumping duty this interpretation is also in contradiction with clarification issued by CBEC vide of Circular 25/2002-Cus dated 09-05-2002, though in the case of another product. It appears that the Designated Authority while fixing anti-dumping duty takes only normal customs duties as is payable by an importer and special cases like imports against DEEC. The injury that gets caused to the importer while fixing variable anti-dumping duty has been considered by the special Bench dealing in matters relating to levy of anti-dumping duty in the case of Puneet Resins Ltd. Vs Designated Authority 2004 (170) ELT 274 (Tri.-Del.). In that case the Tribunal ordered that the Designated Authority should not have imposed variable anti-dumping duty in that case. All these facts bring us to the prima facie conclusion that the outcome of the decisions in Rajendra Chemicals Corporation (Supra) and K.C. Cement Industries Ltd. (Supra) does not appear to be consistent with policy objectives.
16. At this stage we take note that the Government has already issued notification 51/2000-Cus dated 27-04-2000 exempting anti-dumping duty for imports against Advance Licenses. The submission of the appellant is that the appellant had not claimed this notification at the time of import because they thought that anti-dumping duty was not leviable even other-wise and they should be given an opportunity to claim the exemption at this stage. Such opportunity was given in many cases as in the cases of Sonic Brand International (Supra) and in the case of many cases involving import of medical equipments under notification 64/88-Cus. In the latter cases when it was decided that the importer was not eligible for exemption under notification 64/88-Cus the appellants were given opportunity to claim alternative notification 65/88-Cus wherever such plea was taken. The decision in the case of Central India Institute of Medical Sciences and others Vs. CC-2008 (231) ELT 113 (Tri-Mum) can be referred to in this context. In the facts of the present case and based on the submission of the appellant we find it proper to remand the matter to the adjudicating authority to examine the eligibility to notification 51/2000-Cus dated 27-04-2000. The impugned orders of lower authorities are set aside and the matter is remanded to the adjudicating authority to decide on the benefit of notification 51/2000-Cus dated 27-04-2000.
(Pronounced in open court on 18/12/2013)
(MATHEW JOHN) (P.K.DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
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